Hyperpolarized gas MRI offers unprecedented pulmonary functional diagnostic capability. Individual sufferers of COPD could benefit from improved diagnosis and treatment management, while pharmaceutical companies could have more precise measures of the efficacies of their disease- modifying interventions. The US healthcare budget could benefit if the $35B spent on the 30 million Americans suffering from COPD could be directed towards effective treatments through accurate assessments. The primary obstacle to progress has been the availability of high quality hyperpolarization technology and services for both technical and logistical reasons. In Phase 1 we demonstrated a clear path to overcoming technical, regulatory, and commercial obstacles. We combined our core competencies in polarization process simulation, glass vessel development, and laser and magnet design; our installed infrastructure of gas flow, vacuum, thermal regulation, NMR, and computer control; with new engineering designs for pressure vessels and feed- throughs in order to demonstrate feasibility for a high-efficiency 3He polarizer. The technical capabilities of the polarizer will provide polarizations of 50Liters of 3He in 12 hours to levels exceeding 70%. We initiated the regulatory approval process by submitting an Investigational New Drug (IND) application to the US FDA for Phase 1, 2, and 3 clinical trials with human subjects. On the commercial side, we have learned that the principal provider of commercial 3He polarizing systems has abandoned 3He as a product, and is threatening productive researchers with possibly losing their polarizers. Our small business is the only commercial entity seeking to provide hyperpolarized 3He infrastructure and services, and actively pursuing FDA approval. FDA safe harbor laws eliminate any potential issues of patent infringement while pursuing research towards FDA approval. In Phase 2 we propose to demonstrate the prototype system and characterize its properties. We will implement an optimized laser with output power capability exceeding 2.5kW with spectral width of 2nm and angular divergence under 2mr. Our simulations showed that the benefits of spectrally narrowed laser power were outweighed by the loss in laser power for our optimal operating pressures of 6bar (cold). We will perform two measurements of scientific interest for which our apparatus is uniquely capable to clarify the murky X-factor that has limited maximum 3He polarization to 70%-80%. We will implement optimized components into a pre-production commercial prototype using Product Data Management and Quality Systems, now under development at Xemed. The polarizer completed under this project will be deployable as a platform for FDA clinical trials of MagniLium", Xemed's candidate hyperpolarized 3He diagnostic pulmonary functional imaging agent. Helium-3 gas can be magnetized using lasers, and once breathed into the body can report detailed spatial information in MRI scanners regarding lung function and disease. This diagnostic information could help diagnose and manage the treatment of 30 million Americans suffering from COPD, the fourth leading cause of death in the US. Our Phase 1 project demonstrated feasibility for using conventional technology in novel ways to scale up by a factor of 200 the production capability for hyperpolarized 3He, and initiated the FDA Investigational New Drug process. We propose in Phase 2 to further optimize the system and implement these technologies in a compact, robust, automated, and affordable polarizer suitable for on-site polarization at multi-center clinical trials leading to FDA approval of our hyperpolarized 3He imaging agent under the trade name MagniLium". [unreadable] [unreadable] [unreadable]